An estimated 8.5 million people in retirement will pay income tax for the 2024/25 financial year.
New figures from HM Revenue and Customs indicate that the number of people of State Pension age or over paying income tax has soared in recent years due to frozen tax thresholds and successive significant increases to the State Pension . The data shows that some 6.7 million people of State Pension age or over were paying income tax as of 2021/22, but that is projected to have risen to 7.1m in 2022/23, 7.9m in 2023/24 and 8.5m in 2024/25 as more pensioners fall into the income tax bracket.
The Head of Policy at leading independent consultancy Broadstone, explained: “We would expect a growing number of pensioners to be liable for income tax as the country’s demographic changes due to our ageing population and pace of increases to the State Pension. Top Money Stories Today Sir Steve Webb, a former Liberal Democrat pensions minister who is now a partner at consultants Lane Clark & Peacock , said: “These new figures from HMRC are very timely and help to inform the debate about pensioners and tax.
Recent analysis from LCP indicated that just under 2.5m retirees across Britain receive State Pensions which on their own are in excess of the personal tax allowance, at £12,570 per year. Latest State Pension News The Conservative Party manifesto contains a commitment to a Triple Lock Plus - a proposal to ensure the Personal Allowance for income tax will rise each year in-line with the Triple Lock.
However, while benefit policies have generally made pensioners better off, tax changes, such as the recent cuts to employee National Insurance, have helped to rebalance the ‘winners and losers’, the think tank’s report said.
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